Question
A company owes $100 to be paid at times 2, 4, and 6. The company plans to meet the obligation with an investment program that
A company owes $100 to be paid at times 2, 4, and 6. The company plans to meet the obligation with an investment program that produces asset cash flows of A1 at time 1 and A5 at time 5 using Redington immunization. The effective rate of interest is 10%.
(a) Determine A1 and A5.
(b) Does this investment program satisfy the conditions for Redington immunization ?
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International Finance
Authors: Maurice D Levi
5th Edition
0415774594, 9780415774598
